Tether’s First Reserve Breakdown Showed Commercial Paper Dominated

Tether Holdings Limited published a breakdown of the assets it said backed issued USDT on May 13, 2021, giving the market a first category-level view of reserves dated March 31, 2021. The one-page chart showed that the largest reserve bucket was not bank cash but a combined category of cash, cash equivalents, other short-term deposits and commercial paper.

The disclosure mattered because USDT functioned as a dollar-denominated settlement asset across cryptocurrency exchanges and blockchain networks. Its usefulness depended not only on the token contract but also on confidence that the issuer could meet redemption obligations. The May 13, 2021 document supplied more detail than a single assertion of full backing, while leaving major questions about credit quality, counterparties and liquidity unanswered.

What Tether reported

Tether allocated 75.85% of total reserves to the combined cash-and-short-term-assets category. Secured loans accounted for 12.55%, with the chart stating that none were to affiliated entities. Corporate bonds, funds and precious metals made up 9.96%, while other investments, including digital tokens, represented 1.64%.

A second chart divided only the 75.85% combined category. Commercial paper represented 65.39% of that bucket, fiduciary deposits 24.20%, cash 3.87%, reverse-repurchase notes 3.60% and Treasury bills 2.94%.

Because those second-chart percentages use a narrower denominator, they cannot be read directly as percentages of all reserves. Multiplying 75.85% by 65.39% shows that commercial paper represented approximately 49.60% of total reserves. The same calculation puts cash at approximately 2.94% of the total. These are Coinburn calculations from Tether’s published percentages, rounded to two decimal places; they are not independently measured balances.

Disclosure under a regulatory settlement

The timing followed Tether and Bitfinex’s settlement with the New York Attorney General, effective February 18, 2021. The agreement imposed an $18.5 million penalty and required Tether to publish reserve categories and their percentages at least quarterly for two years. It separately required documents substantiating reserve accounts and account segregation to be provided to the attorney general.

That distinction is important. The public chart met the agreement’s category-and-percentage format, but it was not the same as the supporting documents supplied privately to the regulator. Tether said on May 13, 2021 that it would continue publishing the breakdown quarterly for two years.

The settlement recorded the attorney general’s findings that earlier conduct violated the Martin Act and New York Executive Law. It also stated that the agreement was not a final court order and was made without a trial or adjudication. Tether and Bitfinex said separately on February 23, 2021 that they admitted no wrongdoing.

What investors still could not see

The May 13, 2021 chart did not name commercial-paper issuers, secured-loan borrowers, banks or custodians. It gave no maturity schedule, credit ratings, geographic allocation, valuation method or dollar amount for any category. It also grouped corporate bonds with funds and precious metals, preventing readers from isolating the exposure to each.

Contemporaneous reporting by The Block said Tether’s general counsel declined to identify commercial-paper counterparties and described the digital-token portion as bitcoin. Those statements added attribution but did not independently verify the holdings.

The defensible event-day conclusion is therefore narrow: Tether materially expanded public disclosure of its claimed reserve composition, and the chart showed that commercial paper was the largest underlying component. The document did not constitute an audit, prove that every listed asset existed, or establish how quickly the portfolio could be converted into dollars under stress. Its significance lay in making the reserve model more legible—and in revealing how much essential information remained outside the public record.